The Biggest Game Changers in Renting Are Older, Highly-Educated Renters, and 2.5 Million Stronger

Have you noticed how different renting is today from one or two decades ago? I think most of us would agree that renters were usually people in their 20s, renting mostly bare-bones dingy apartments with stinky carpeting and peeling windows in poorly-maintained old buildings until they saved enough to buy a place of their own. With some exceptions, this was the profile of the typical renter until recently.

But the newest trends in apartment development are suddenly attracting a new kind of renter. This renter is interested to live in a place that offers a convenient, quality lifestyle, a comfortable living space, a place to exercise, and a place to socialize all-in-one. We were very interested to find out who exactly are these new renters and what motivates them to rent instead of buy.

3 big ways in which the U.S. renter profile has changed

We turned to U.S. Census data to see if it can shed some light on how renting has evolved since 2009 — around the time when the scales started tilting in favor of renting. We looked at changes in the number of renter households by age, education level, and family type.

National stats revealed that, between 2009 and 2015, the biggest changes in the renting population came from seniors aged 55 or over (up by 28%), compared to only a 3% increase in renters 34 or younger. By education, the highest increases were in renters holding a bachelor degree or higher (up by 23%), and by family type, in families with no minor children (up by 21%).

What do these three categories have in common? They all point to one group: empty-nest Baby-Boomers. Whether driven by a change in lifestyle, a consequence of the housing crash, or an inability to find affordable homes to downsize, senior households are embracing renting in droves.

Seniors are the new kids on the block in the rental market

Senior renters not only account for the largest percentage increases but also the largest net increases compared to other age groups. About 2.5 million senior households joined the renter cohort nationwide between 2009 and 2015, while the number of renter households aged 35-54 added 1.95 million, and those younger than 34 increased by only 0.5 million in the same time frame.

A hefty 39% more renters over 55 years old live in the suburbs compared to 2009 and 21% more in the cities. Comprised mostly of Baby Boomers, this generation has lived a big part of its life in the suburbs, essentially being responsible for the launch and prosperity of the consumer suburb. Owning a home and raising a family in a suburban community truly defined this age group. Now it finds itself in a big empty house, with too much space to keep up and high property taxes to pay.

“Lowering living expenses, looking for a different lifestyle, less house-related work and overall less responsibility can be achieved by downsizing, so a lot of retirees opt to rent.” says Simona Solomie, a real estate broker with Remax Masters of Morton Grove, Illinois, who works with home sellers, buyers, and renters in the western and northwestern suburbs of Chicago.

Baby boomers also account for the highest increase in renters in urban areas, but the spike in numbers is much higher in the suburbs (21% vs 39%). The second highest increase comes from renters aged 35-54, 27% in the suburbs and 8% in the city.

Renter age groups in the top 20 largest metros: Riverside, Tampa, and Phoenix most Baby-Boomer-friendly

In all 20 largest U.S. metros studied, without exception, the rate of increase in senior renters greatly surpasses that of younger renters (see the green bars on the graph below).

Between 2009 and 2015, the senior renter population has grown the fastest in the metro area of Riverside, CA (by 63%), followed by metro Tampa, FL by (61%) and by metro Phoenix, AZ (by 59%). However, the largest net increases were in Los Angeles metro (which gained 134,000 new senior renter-occupied households and lost 26,000 renter households under 34 years of age). New York City gained an additional 124,000 renter households over 55 during this time period and about 54,000 under 34.

Both suburbs and cities see a surge in highly-educated renters

If there was any doubt left that some people actually choose to rent, even though they could afford to buy, the latest surge in the number of highly-educated renters should help erase those doubts. Of all education levels, those holding a bachelor degree or higher account for the largest share of new renters added between 2009 and 2015 in both suburban and urban areas, percentage-wise and in net numbers. The number of renters who hold a bachelor degree or higher increased by 26% in the suburbs and by 20% in the cities.

The second highest increase in renters comes from people with some college education or equivalent (a 19% increase in suburban areas and 12% in urban areas), while those with a high-school diploma or less accounted for the smallest increase.

Phoenix and Denver attract highest-educated renters

The national trend is confirmed at the metro level. In all 20 largest U.S. metros, except St. Louis, MO, the largest gains of new renters were people holding a bachelor degree or higher (green bars on the graph below). In Phoenix metro, renters with a bachelor degree increased by 48%, in Denver metro by 45%, in Tampa, FL metro by 38%, and in Atlanta metro by 37%. At the same time, the number of least-educated renters is decreasing in several metro areas, including Denver, St. Louis, Philadelphia, New York and Boston.

More families (with and without children) rent in the suburbs

Looking at family types, renting households with no children saw the biggest jump (up 33% in the suburbs and 16% in the city). This category includes either couples or single householders with no children present in the household. (Baby-Boomer empty-nesters fall into this category.)

The number of renter families with children also grew significantly, by 29% in suburban areas, but only by 8% in urban areas — no surprise there, considering that most families with kids prefer the suburbs.

Suburban DC is most sought-after by renting families with children

In suburban Tampa, FL renting family households with no children increased the most (by 74%), while suburban Washington, DC is the most popular for renting families with children, which increased by 83%. The increases are much lower in urban areas. The most significant increase in the number of renters was in urban Seattle, WA where the number of families with no kids is up by 36%.

Renting in the suburbs has gained popularity with all types of renters

Now that the lure of apartment living has spread into the American suburb, renters who want to live in a walkable neighborhood and have a short commute to work can get what they’re looking for thanks to the emergence of the “suburban downtown” and to a concept known as “transit-oriented development.” A great example is Elmhurst 255 in suburban Elmhurst, Illinois, self-described as a “new luxury apartment community in the heart of downtown Elmhurst, within walking distance of grocery stores, the Metra, shopping, theater, museums, restaurants, and nightlife.” For those not from Chicago, the Metra is the train system that connects the suburbs of Chicago to The Loop, Chicago’s business district.

This is exactly the type of suburban new rental community that appeals to both young and old. With such attractive (and often cheaper) housing alternatives right in their community, the decision to switch to renting has gotten much easier for suburban homeowners.

In each of the categories of renters we analyzed suburban areas were gaining renters faster than urban areas. Suburban renting has become so common and so popular, that real estate agents now specialize in leasing, which was certainly not the case 10-15 years ago when hardly anyone used an agent to find an apartment for rent.

“From my experience renting in the suburbs is preferred because – one: renting in the suburbs is less expensive than renting in the city, and two: the suburban lifestyle has changed so much in the past ten, fifteen years for a lot of suburbs, it has become vibrant and full of life with close-by shopping, restaurants, entertainment, fine parks, and transportation.” added Solomie.